mid day 6-7-2012 - Comments from Country Hedging's Chris Steinhoff

Below is the mid day update from Country Hedging's Chris Steinhoff

Choppy, choppy, choppy…Crude up $1.80 then only 70 cents, then $1.50 higher, then 60 cents firmer…Gold and the US$ are weaker…DJIA is 86 points better…FED bernanke’s words were a little disappointing to the $.

Corn----sharply higher early in modest volume but has backed off as the outside markets have backed off. Weather, tight cash market and World economic(china rate cut) are the main drivers, so too is the fact the GSCI roll begins today, and some may be playing ahead of that.  Export sales were slow on corn as the month of May corn sales were pathetic. Japan and Mexico were biggest buyers, unknown cancelled 50tmt. The USDAs 1.7bb export total is at risk. Weather across parts of US corn growing areas has been dry, and by reading crop comments on AgWeb there doesn’t seem to be a good cornfield anywhere in the US. Meanwhile the crop gets closer to tasseling across Southern and eastern growing areas and they could use some rain. Weather forecasts are turning drier next week with coverage and amts seemingly no better than 40% of 1/10 to ¼ inch. Spreads vs CN are a nickel weaker and delivery values along the ILL are cheaper than the strong cash market. US farmer sells very little old crop or new crop, instead waiting for the rally, even though CN was $6.30 in May, $6.70 in March and $7.80 last August! But weather and $ rule, and until rain falls or forecasts make a complete change things may be very well supported, at least until the Wall Street casino sells. Black Sea region has received rain and they may be exporters, Brazil crop looks large they may export more. China may OK Brazil origin

Beans---25-30 higher. Funds are long a lot of beans and meal. Farmer movement is quiet as 500 bushels generates some decent cash. Weather is not as critical at this stage for beans, but rain wouldn’t hurt. News is pretty light. Export sales were decent but the slowest of May. USDA may need to raise the export guess.  Brazil farmer has sold and trucked a lot of beans supposedly as some traders feel Brazil WILL run out of exportable supplies at some point. Market still depends on China for the demand in the world and US crusher keeps crushing but is having a harder time buying. Spreads are a little weaker vs SN. Sx/SF is a slight carry with the uncertain crop and acres. If moisture allows, double crop acres should be big.

Wheat---HRW harvest finds a better crop than farmers thought. As combines are now stretching across a big section of KS, or will be by next week. ND gets scattered rain and in many places the crop looks better today than it did yesterday. Parts of the Black Sea have received good rains which help what is there of the winter wheat and most definitely helps the spring crops. Keep hearing of a small area in ND/MN where the spring wheat is short, heading out and the heads are small-but this area is small and too bad if you are in that area, as other areas look fabulous. Farmer selling some spring wheat. Export sales were poor, and we saw cancellation or rolling forward into the new crop year. May 31 stocks estimates could be interesting after seeing 20% of HRW harvest in the past marketing year. Overall demand remains poor and mills have their pick of HRW or DNS for protein.

Christopher Steinhoff
Market Analyst
800-328-6530
651-355-6558
651-355-3723 fax

www.countryhedging.com

6-11-2012 Mid Day Comments from Country Hedging's Christopher Steinhoff

Below are 6-11-2012 Mid Day Comments from Country Hedging's Christopher Steinhoff

Spain banks get a bailout, but do not know what that really means for their unemployment??? DJIA is 37 points lower..US$ is slightly weaker…Crude oil is  90 cents lower…see CME announcement below

Corn----old crop was higher and new crop was down a couple, the BOOM pit opens at 930 and selling shows up. Must be trading radar as apparently the last system for a week moves into ILL. This system looks to be the last for a week to 10 days and keep hearing that parts of the ECB are not looking good and “burning up”. Well we need a yield larger than ever before to solve our corn balance sheet issue, can we get it? I am not ready to say no but it appears it may become more difficult as it seems today’s hybrids like it alittle too dry than a little too wet. USDA is out tomorrow and they may not change the corn balance sheet much as an early harvest will be in this old crop marketing year. Many expecting corn conditions to decline this afternoon. Export inspections of 17mbis incredibly disappointing as 33mb is needed weekly to achieve the USDA estimate, so maybe it is a good thing China bought some old crop otherwise what would our exports be? WCB looks to be in pretty good shape except parts of NE and KS are dry. US farmer hauls DP in some areas as “free” is what they like. A few are doing some pricing. $5.00 cash may be a price where they begin to sell some new crop, but time will tell on that. Spreads are firm as CN gains a nickel on everything else. We will begin the transition from old crop to new crop at some point so manage your cash and futures positions!!!!!!  Z/H is an 11 ¾ carry. Movement is slow enough basis remains firm. Could be some pre report positioning.

Soyabeans----same weather for beans but beans have time to be helped. Many expect the USDA to tighten old crop  carryout tomorrow to sub 200mb. Supplies seem tight as we keep shipping beans and crushing beans. Export inspection were 14.2mb, well above the  11 mb needed weekly. Looks like there may be some spreading of buying beans and selling corn as the SX:CZ is 2.48:1 and some believe it could go to 3:1. Farmer selling is light. Many still believe SA will run out of shippable soybeans sooner than later---but maybe their farmers are a lot like the US farmers who ALWAYS have more at home than they tell us. Here too the WCB seems to look better than the southern or ECB, but it is only June 11 and we have plenty of time. Biggest question is how many acres got planted? 74? 72? Or 76? Big USDA report is on June 29 on acres and stocks. Could be some pre report positioning.

Wheat----firmest for the first few hours this morning, why? Not following corn, not trading HRW harvest as yield reports definitely have a shot at a 400mb Kansas crop. Do we have a lot of pent up demand? Doesn’t really look like it. First weekly export inspections of the new marketing year were 21.5mb. Most DNS areas look very good as even a few of the dry areas actually got rain this weekend. Specs are buyers as we bounce out of last week’s lows. US spring wheat farmer is quiet and we are getting to where the winter wheat farmer will seed double crop beans if he has the moisture to do it.

Overall pretty quiet in the world as Egypt may begin to tender again. World and US have plenty of wheat!

Floor Opens at 7:20 a.m. CT for CBOT Grains and Oilseeds Tomorrow--June 12, 2012

As previously announced, pending CFTC review, floor trading for CBOT Grain and Oilseed futures and options will open at 7:20 a.m. CT on Tuesday, June 12 in advance of the release of two major USDA reports: Crop Production and World Agricultural Supply and Demand Estimates. Note that the current floor close (1:15 p.m. CT) will still be in effect on this date.

Christopher Steinhoff
Market Analyst
800-328-6530
651-355-6558
651-355-3723 fax

www.countryhedging.com

Overnight Highlights from Country Hedging's Tregg Cronin 6-12-2012 USDA Report day!

Below are Overnight Highlights from Country Hedging's Tregg Cronin

Outside Markets: Dollar Index down 0.101 at 82.414; NYMEX-WTI down $0.19 at $82.53; Brent Crude down $0.43 at $97.57; Heating Oil up $0.0058 at $2.6415; Livestock markets are mostly firmer; Gold down $5.70 at $1589.80; Copper down $0.0135 at $3.3315; The Yen is weaker but all other major commodities are firmer; Cocoa, Milk and Cotton are all firmer; S&P’s are up 3.50 at 1310.50, Dow futures are up 49.00 at 12,431.00 and Treasuries are softer.

Asian stocks were weaker while European indices are stabilizing this morning following yesterday’s meltdown in the US.  Heading into the 4:15 close yesterday, the Dow posted a huge outside reversal lower to settle off 142 points.  Bond yields for both Spain and Italy continue to quietly work higher, creeping near or above the 6.5% mark, but still below the unsustainable 7.0% level.  Overnight, UK industrial production posted its 14^th monthly fall, down 1% in April compared to the same month a year ago, while it was unchanged from March.  In the US today, we’ll get May import prices followed by the Federal Budget at 2:00 EDT.  The Dollar Index is still in a short term downtrend, but the intermediate and long terms trends are arguably still up.

Rainfall in the last 24 hours was heaviest in MO/AR/MS/AK/GA/SC which all had areas receiving 0.50-1.0”.  The heart of the corn belt also saw rains with IL seeing a general 0.25-0.50” although a few spots in SC-IL did see 1.0”.  IN was almost completely dry while OH saw anywhere from a trace to 0.50”.  Storms are moving across the southern plains and Dixieland this AM.  5-day forecasted precip maps are showing heavy rains impacting places NW of a line from Kansas City to Green Bay with areas in IA/NE/MN seeing as much as 2.9” the next several days.  The southern plains will also be seeing sizable chances of rain, but everything SE of that line will be dry, including MO/IL/IN/OH/MI.   The European model is holding out chances for 0.50-1.00” to fall in the OH-River Valley towards the beginning of next week, but other models are more timid.  Temps should mainly be in the 70’s and 80’s with a few 90’s.  The 11-15 is putting a disturbance in the central/southern corn belt, but a bit far out to get much confidence.  Weather remains unsettled for the central belt.

Grains are trading in similar fashion to the way they closed yesterday with corn weaker, soybeans and wheat firmer.  This is definitely the feeling in the trade heading into the USDA reports that we could get something bearish on corn (even though the average estimates point towards cuts to carryout), while soybeans and wheat could receive supportive numbers.  The breakdown in the outside markets late yesterday helped knock us off our intra-day highs as did the storms which rolled through the central and western corn belt.  When IA gets rain, people assume the entire crop just got better.  Last night’s FOB comparative (attached) does illustrate some concern on the corn side of the ledger.  Without freight, our corn price is $30-40/MT over Argy and Brazil, and probably worse on Ukraine.  Fortunately, our soybean prices remain very competitive with Brazil, and while Argentina is better by $4-9/MT, their ongoing labor disputes make the issue much less black and white and is currently slowing grain to the ports.

Data from Australia continues to confirm a robust export program, as the Australian Bureau of Statistics said the country shipped 2.36MMT in April, the second largest amount of wheat moved in a single month over the last nine years.  This was up 15% from March and 40% y/y.  Dryness in W-Australia is still a concern for winter grains being seeded at present.  South Korean mills bought 23,800MT of US-DNS, SW and HRW for Aug 15-Sep 15 shipment from LD.  Prices were $247-324/MT FOB.  From Beijing, China’s 2012 wheat output is expected to fall 1.63% from last year to 109.5MMT as rainfall during flowering and disease cut yields.  This is in stark contrast to the CNGOIC which said output would rise 2.02% to 120.3MMT.  Crop conditions fell much more than analysts expected last night in the US.

Open interest changes saw liquidation in about everything with wheat down 2,010, corn down 10,270, soybeans down 130, meal off 1,730 and oil down 7,260.  Soybeans continue to show very little open interest change which would suggest ownership is continuing to change hands.  While weaker yesterday, spreads have been on a firming trend and basis remains above delivery equivalence, implying commercials have a reason to own soybeans.  FWIW, crop scout Dr. Michael Cordonnier cut his national corn and soybean yields last night thanks to sharper than expected declines in the national condition ratings.  He is now 161bpa on corn and 43.0bpa on soybeans.  He also made the comment soils are drier now than they usually are the 3^rdweek of August based on an 11-year soil moisture index.

Average estimates for this morning’s report are 11/12 carryout on corn at 828mbu, soybeans 197mbu and wheat at 757mbu.  12/13 ending stocks are seen at 1,740mbu (down 140mbu) on corn, 147mbu on soybeans and 728mbu on wheat (down 7mbu).  Winter wheat production is seen being trimmed slightly.  Argentine production should see cuts on both corn and beans while Brazil is expected to rise a bit.  Trade will be open at 7:30 in both the pit and electronic when the numbers are released.  More at 7:30 CDT.

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Mid Day Comments from Country Hedging's Chris Steinhoff for 6-12-2012 USDA Supply and Demand Report Day!

Below are Mid Day Comments from Country Hedging's Chris Steinhoff for 6-12-2012

Crude oil is 30 cents firmer…DJIA is up 105 points…gold is $22.00 firmer….Spain, Greece blah blah…ND

Corn---Fund and spec selling in moderate volume. We got to experience a USDA report during mkt hours and we saw volatility as CN moved up 6 to down 15 in a minute or two. USDA basically left the US balance sheets unchanged. 2011/12 lowered exports and raised ethanol for unchanged carryout of 851mb. They also left the 2012/13 carryout at 1.881bb, leaving prod and acres alone as the next 30 days we will get qrterly stocks and acres and another USDA balance sheet where they may begin to adjust yields. World corn balance was left at 152mmt 2012/13 carryout vs 129 in 2011/12 and 124mmt in 10/11. Much of that depends on US crop being quite large.  Funds just do not appear to like to play in the corn market much anywhere, why?  I do not know. Rain totals were decent in parts of ILL, MO and OH, but IN appears to have gotten missed and forecasts do not look too good. WCB appears to be getting decent coverage in the next 5 days…ECb just seems to keep missing it. Farmers are selling some old crop corn where they’ve received rain and the crop looks OK, but it is light movement. New crop selling is non existent as they missed it and know it!!!!. Funds roll positions from CN. Spreads are firm vs the CN. CN/CZ is a 62 inverse. Z/H is an 11 ¾ carry. June 29 (june 1) stocks report could be interesting as to how they fill out the surveys currently in their mailboxes!!!!!! Corn is coming out of its ugly phase and growing fast in the WCB as many people believe we’ll see head high corn by July. Curly takes golf lessons

Beans---USDA drew a line in the sand and says 140mb carryout is the smallest it is getting! USDA also tightened the 2011/12 carryout to 175mb  by raising crush and exports. China is basically the world market and their economy is being questioned…maybe they just need to inject $ into Chinese banks and see what that does for the ghost cities. Farmer selling is light and difficult to figure out where the crusher and exporter is actually getting enough beans to do what needs to be done!!!!! I keep hearing scattered stories of soybean stands being poor as beans are in their ugly phase. World supplies getting larger depends on the big US crop. But we are stillprojected nearly 17mmt less than a few short 2 years ago…So we need Brazil and Arg to step up and produce beans for China next year. What will uncle sam find on acres??? With s ILL and MO getting rain and winter wheat harvest is well along in those states on June 10, plus SE US getting rain, what does the chance of double crop look like????? Spreads are firm vs SN and SX/SF is a penny inverse.

Wheat---HRW harvest, SRW harvest go fast and overall DNS crop looks promising. When will farmer sell to make space???? US and World have plenty of wheat even though some “experts” think the situation is tighter than expected. Why did the USDA not address winter wheat harvest in the 2011/12 balance sheet??? What did the farmer put on the June 1 stocks survey??? Are all those new tin piggy banks as empty as they say????? I personally do not think so, has anyone knocked on the side of these bins lately? What noise do they make? MGEx is inverted as many run scared of bids rolling soon, like maybe today???? Some are playing games as commercial isn’t about to let the farmer get paid to carry that wheat  that he says he doesn’t have. DNS farmer awaits the new crop protein premiums/discounts thinking he may hit a home run. US HRW yields are very good as KS is in gut slot harvest. Moe is in Canada fishing.

Christopher Steinhoff
Market Analyst
800-328-6530
651-355-6558
651-355-3723 fax

www.countryhedging.com

Morning Highlights for Monday June 18 2012 from Country Hedging's Chris Steinhoff

Crude oil is down 70 cents…gold is $5.50 lower, silver is 30 lower…Greece situation is still quite fluid but they did have elections…Who is next inline for a bailout??? Nikkei , Hang Seng and Shanghai were firm…Dow, Nasdaq and S&P futures are lower…

Corn…rains are light in Indiana and the forecast doesn’t look real good this week..meanwhile the ECB looks very good in many areas

                …some ECB corn will begin pollination soon and some of that corn is under stress

                …weather is becoming critically dry in parts of the ECB

                …last Friday Informa raised their acres to 96.759 million.

                …farmer movement is slow, but at some point the inverse will disappear

                …keep hearing reports of small ethanol plants shutting down until margins improve…...corn origination is difficultn

Old crop trading up 5, new crop trading up 10

Beans…mainly higher overnight as dry corn weather = dry soybean weather

                …higher on the Greek election? Sure let’s go with that.

                …China demand? Seems to be kinda slow lately, as they try to sell reserves

                …informa acres guess is 75.959

                …supplies are tight in SA too

Trading 10 to 15 better…

Wheat…US SRW and HRW harvest moves forward adding to US supplies

                …there are scattered concerns throughout the world like Argentina, Aus, Russia etc etc

                ..Iraq bought some wheat over the weekend, but not from the US

                ..india and iran are in talks for some wheat business

Trading 3 to 8 higher…

Christopher Steinhoff
Market Analyst
800-328-6530
651-355-6558
651-355-3723 fax

www.countryhedging.com

Overnight Highlight's from Country Hedging's Tregg Cronin 6-14-2012 Firm markets to start

Below are the overnight highlight's from Country Hedging's Tregg Cronin

Outside Markets: Dollar Index up 0.035 at 82.093; NYMEX-WTI up $0.12 at $82.74; Brent Crude down $0.21 at $96.92; Heating Oil up $0.0018 at $2.6127; Hogs are firmer and Cattle are mostly weaker; Gold up $1.90 at $1620.00; Copper down $0.0010 at $3.3390; The Yen and Loonie are firmer while all other major currencies are firmer; Cotton is better, but most of the softs are weaker; S&P’s are up 0.75 at 1316.25, Dow futures are up 11.00 at 12,512.00 and Treasuries are a bit weaker.

Headlines on financial websites read something like this today: “Spanish Crisis Deepens.”  Yesterday, Spanish government bonds saw their yields rise to euro-era records during auctions for 10-year debt.  The yield hit 6.96%, dangerously close to levels considered unsustainable, following a report which said Spanish housing prices fell 12.6% in the first quarter.  Moody’s became the latest rating agency to downgrade the country, all of which increases the odds a bailout won’t be far away.  The terrible housing market in Spain is what makes their situation larger and potentially more serious.  Obviously this is in addition to the fact Greece will hold her latest round of elections Sunday which likely aided in the selloff yesterday afternoon.

Rain in the last 24 hours was confined to two areas in the US with ND/SD/MN/MT seeing rains as well as places in TX.  Looking at the rainfall maps, it looks like the two dry areas in ND (SW and SE) should have received some nice 0.25-1.00” rains.  Totals in S-OK and TX looked similar.  The system in the northern plains is moving into N-MN at the moment and is expected to bring severe weather to the Twin Cities tonight and tomorrow.  The 5-day forecasted precip map shows heavy rains on a line from S-NE to the UP of MI with totals across IA and WI as high as 3.8-4.0” while the Dakotas/KS/MO/MN should also see good rains.  N-IL should see some measured precip, but the storms don’t look to get into the driest areas of IN/OH.  NOAA maps are looking a bit less warm and a bit less dry today with normal weather forecast in the 6-10 and 8-14.  Private models generally agree with rainfall amounts and placement in the 6-10, although push moisture into the S-Midwest for the 11-15.  The better chance of rain next week for IL/IN/OH will keep prices under pressure.

Grains are bouncing a bit overnight while the soy complex is fairing about like it did late in the session yesterday.  The impressive cash markets won’t seem to let corn die a slow death into July delivery with the type of premiums being paid along the river, at ethanol plants, off the west coast and in feed lots.  Unfortunately, with World FOB prices being what they are, the hefty basis levels aren’t helping our corn get any more competitive with Brazil, Argentina or Ukraine.  Luckily, domestic demand remains firm enough, and producer selling slow enough to support things.  Weekly ethanol production continues to motor along, beating expectations and grinding more corn than we need to.  The liquidation in the soy complex seems speculative and tied to the shaky outsides.

From China, we see the government sold 17,922MT of soybeans from reserves in an auction of about 600,000MT.  The sales are a bit higher than last week’s, but the demand for these old, poor quality beans is apparent, especially given US and SA beans are price competitive.  India said overnight they will allow 2MMT worth of wheat exports from government reserves, but at no less than $228/MT FOB, or around $6.20 bu.  Also from New Delhi, the Indian government approved increases in the minimum purchase prices for rice, soybeans and corn, a move which is sure to keep food inflation high.  Overnight, Taiwan bought 47,050MT of US-DNS at a price of $333.94/MT FOB as well as some HRW at $301.35/MT FOB.  Japan bought 147,118MT of wheat from the US and Australia, but mostly US.

Open interest changes during yesterday’s session included an increase of 6,441 wheat and 4,025 soybeans.  Corn was down 1,585, meal off 1,038 and oil down 7,482 contracts.  Chicago wheat closed almost unchanged which is interesting given the big O/I increase.  Corn looks like short-covering in the July as people blow out ahead of delivery.  Chinese markets were down sharply with soybeans off 20.50c, meal down $6.40, oil off 107c, but corn was unchanged.  The Reuters commodity wire carried a couple stories worth noting last night.  First, the scramble for US corn has heated up, pushing CIF basis to the highest price in a month.  They also said estimates from 15 analysts polled have dropped the US national corn yield 3% to 161.5bpa vs. the USDA’s current 166bpa.  Argy has slowed soy crush.

The firm cash markets looks like they’ll be enough to propel us higher today, at least in the grain markets.  It should be noted, however, outside markets appear to be easing, and tensions will remain high as we head into the weekend and prepare for Grecian elections.  The speculative length is still in the soy complex, and when they liquidate it will be felt their first.  Specs are near flat or even a bit short corn, and back to being sizable shorts in Chicago wheat.  Weather remains a big driver, and right now it looks more favorable.

Trade as of 7:10

Corn up 7-8

Soy down 2-5

Wheat up 4-7    

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

USDA Report Day - Morning note from Country Hedging's Joel Fitch

Below is morning note from Country Hedging's Joel Fitch

Good Morning,

Estimates for the report are below for comparison. 

The report was not that interesting.  Corn acreage at 96.4 was 400k larger than the guess.  Soybean acreage was 76.1 million, which was 500k above the average guess.  As I’ve been saying this number is now the high water mark because of the weather not allowing double crop bean acres to get planted.  Spring wheat acreage was only 12 million, which is below the 12.7 average guess.  I’m a little surprised, by this, it tightens the spring wheat market a little.

Stocks were in line with the guess on corn at 3.15 billion.  Soybeans were 667 million and above the 640 average guess, which could pressure the front end against the new crop.  Q-X could see some pressure, but the bean story is strong for both.  Wheat stocks were 743 million, not much here.

And now back to weather.  NE and IA are getting scattered rain today and this system should continue over into the Eastern Corn Belt.  

Questions?  Have a great day!

Joel Fitch
Market Analyst
800-328-6530
651-355-3792
www.countryhedging.com

Mid day update for 6-29-2012 USDA stocks and acre report day

Below is mid day update from Country Hedging's Chris Steinhoff

Crude oil is up $4.50, US$ index is 1.16 points weaker…DJIA is 220 points firmer…all seems to be a result of Eurozone bailout fund and EU banks accessing that $...Month end  and quarter end positioning is prevalent.

I’ll be brief…

Corn---report day and the market was kinda volatile for about 5 minutes on either side of the 730am release time. Acres were slightly larger than expectations and about 500k larger than in March. June 1 stocks were 500mb smaller than a year ago according to the survey anyway. Farmer hauls old crop corn, and in many instances is surprised at how many bushels he still has left!!! Amazing!!! ….Garbage into the report, garbage out….Weather still remains warm and dry with a few scattered storms on the radar moving across ILL, but not really in the areas that need rain. Outside market strength and US$ weakness also provides major support. Cash markets seem to be steady at best and exporters seem to have a hard time finding homes for trains.  Domestic users appear to be slowing down with some ethanol plants beginning their scheduled downtime sooner than planned. CN enters first notice day and delivery and finds strength to lead spreads firmer. Not much else as we enter a weekend tasselling corn amidst hot and dry conditions. Are we factoring in the worst possible corn news???

Beans---lead the way in strength on tight world supplies, strong demand and the crop most influenced by world economics. USDA found a few more acres than expected but the double crop bean  acres are at risk because of dry weather. Personally I think those acres will get seeded, but whether they have the moisture to grow is the question ? All else is quiet as farmer selling has slowed, so has farm gate trucks. Be careful on new crop purchases as X forward is inverted.

Wheat—HRW harvest expands into South Dakota with strong yields reported, quality good and protein mixed. SRW harvest moves too. Summarizing KS, it seems the harvest was better than expected volumes. MGEx moves higher and the spring wheat crop looks pretty good in most places. Acres came in about where I expected as we saw a slight increase from March intentions. Stocks surprised me somewhat as it appears the USDA or farmer did not recognize an early HRW harvest. So the next stocks # may find a few bushels. Cash markets are mostly steady. Farmer movement is pretty strong for old crop DNS and steady HRW.

We have a watch box in IN…yoo hoo

Christopher Steinhoff
Market Analyst
800-328-6530
651-355-6558
651-355-3723 fax

www.countryhedging.com

Overnight Highlights from Country Hedging's Tregg Cronin 7-10-2012

Below is overnight highlight's from Country Hedging's Tregg Cronin

Outside Markets: Dollar Index down 0.050 at 83.111; NYMEX-WTI down $0.21 at $85.81; Brent Crude down $0.82 at $99.50; Heating Oil down $0.0060 at $2.7430; Fat cattle are weaker, feeders firmer and hogs softer; Gold up $7.40 at $1596.50; Copper down $0.0015 at $3.4300; The Euro and Franc are a hair weaker while all other major currencies are firmer; Coffee is the only weaker Soft commodity this morning; S&P’s are up 4.25 at 1353.50, Dow futures are up 52.00 at 12,737.00 and Treasuries are weaker.

World equity markets are trading firmer this morning after the Eurozone drew up a Spanish aid blueprint for €100 billion bank bailout, a deal which is expected to see the first €30bn from the eurozone’s €440bn rescue fund.  The bailout will come with conditions such as stress tests for 14 of Spain’s largest financial institutions.  Other news included Chinese export and import growth both slowing in June, signs China could still be heading for a hard landing.  Exports rose 11.3% y/y, down from 15.3% in May.  Imports were up 6.3%, half of May’s 12.7%.  China’s trade surplus was $31.7 billion.  The other big news headline was word of PFGBest’s trading accounts being frozen on ideas customer seg funds could have been mismanaged.  Still in the early going for this story.

Before getting to specific weather, the National Climatic Data Center said the first six months of 2012 were the warmest of any year going back to 1895.  Drought now covers more than half the contiguous 48 US states.  The national temperature was 52.9 degrees through June, or 4.5 above average.  Rains in the last 24 hours were confined to the southern plains and delta where many states received 0.10-0.50” with localized amounts of 1.0”.  Nothing in the main corn belt states received rain.  Showers continue to work across the southern plains, Delta and SE-US this AM.  5-day forecasted precip is showing 0.4-0.8” totals for the Dakotas, nothing for IA/NE/WI/MO/KS, but IN/OH could still see some 1.0”+ total amounts.  The heaviest rains will fall in LA/AR/MS/AL/TN/GA/SC/NC with 1.5-6.3” possible.  That rain in IN/OH would be welcome.  Overnight 6-10 day maps are keeping the door open for more storms in the ECB on one model but not the other.  The Dakotas will be quiet.  The 11-15 has lots of rain in the central Midwest but needs verification.

Grains are trading weaker on a bit of profit-taking, led by wheat as the story remains a row crop one.  Between what looks to be already factored in crop condition ratings, and the PFGBest brokerage mishandling of customer accounts, both seemed like good enough reasons to set back a bit overnight.  Weather remains the dominant factor, and there are a bit better rain chances at the end of this week and in the extended maps, but this has been the case for much of June and July so far to no avail.  We are still trying to “realize” how small this crop actually is, and it doesn’t appear we’ve done that yet.  Already this morning, some are talking of national yields in the 130’s.  Today could also see some additional de-risking in front of tomorrow’s USDA report which could be bearish.

Overnight headlines included several from China which said summer grain output would hit a record 129.95MMT, up 2.8% y/y.  Of course it is.  June soybean imports were up 31% y/y and 6% from May at 5.62MMT.  Jan-Jun imports totaled 29.05MMT, up 22.5%.  In exports news, South Korean flour mills bought 26,500MT of US wheat from STX for Sept 15-Oct 15 shipment.  The wheat included 8.5-9.5% soft white at $301/ton, 11.5% HRW at $314/ton and 14.0% DNS at $368/ton, all FOB.  Japan is tendering this week for 131,379MT of US-wheat for Aug-Sep shipment.  According to yesterday’s COT report, speculators increased bullish bets on commodities by the most in 2-years.  Ethanol prices rose to the highest level in 7-months to $2.504 yesterday, thanks to rallying corn prices.

Open interest changes yesterday were rather impressive in corn, up 34,100 contracts with fresh money pouring in as the market hit limit up.  Wheat was up 710 contracts, beans up 890, meal down 3,420 and soy oil up 3,880.  The soybean stat is a bit concerning as the 40-60c rally clearly saw big changes in ownership, possibly from the commercials to the specs.  There were 220 redeliveries in Chicago wheat overnight.  Chinese beans were down 10.25c, meal up $5.20, corn down 2.50c and wheat down 3.75c.  Paris Milling wheat is down 1.1%, UK feedwheat down 1.08%, Paris Rapeseed down 0.58% and Canola is down 0.24%.  Corn export basis backed off at both export fronts and at most ethanol plants yesterday as demand continues to wane.  I’ll detail the COT in this afternoon’s writeup.

Call things weaker in the early going, but don’t rule out two-sided trade today.  Our limit up move yesterday clearly priced in part of the 8% drop in corn conditions and the 5% drop in soybean conditions.  That doesn’t mean we’ve penciled in the smallest crop size as little rain is on tap this week.  Still, we’ve likely earned some more choppy trade at least.  Review % sold ahead of tomorrow and especially with this latest brokerage debacle getting going.  USDA releases their WASDE at 7:30 CDT time tomorrow morning.

Trade as of 7:00

Corn down 6-8

Soy down 8-10

Wheat down 8-15    

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

mid day update from Country Hedging's Chris Steinhoff 7-10-2012 day ahead of USDA report

Crude oil is down $1.00…US$ is 0.200 firmer…DJIA is  up 4 points…grains-can’t be up everyday

Corn---can’t be up everyday as traders think to tomorrow’s USDA and square up and take profits. Tomorrow report may be irrelevant as traders may not agree with USDA anyway….. Rain seems to stay 7 days out, and we now needed it last week.  Get to July 30 and rain will not make much of a difference and we will transition to a demand market. Markets are at the highs when news is at its worst…can news get much worse??? The US corn crop is smaller today than it was yesterday. Period…but we need to remember we have already rallied $2.00+…. So something is factored in. Hearing ethanol plants being told by management to cut grind 30% immediately. Talk of selling contracts back to elevators and no new DDG sales! Also hearing farmers on the fringes of the “new” corn belt realizing they can not grow dryland corn as weather doesn’t allow it…there was a reason the old timers grew wheat. Because the rain was Nov to May, Not may to July!!!!!!!!!!!!!!! Spreads are slightly weaker. We are beginning to see major signs of a demand slowdown. Farmgate offers now well above the market as many open orders have been achieved. Much speculation on the mandate and whether uncle sam ever considered what happens when the US sees a drought.

Soyabeans---world demand remains strong. Mainly China. US crusher watches beans go by door to the export market. Dryness hurts the beans to as beans are losing yield potential daily as well in many areas, but there remains time to still have a good crop. Where moisture allows there are still double crop beans being seeded, but those areas are scattered. Total planted/harvested acres may not be as high as predicted as summer dryness hurts the double crop option. New crop export book is large but then again there seems to be plenty of old crop book too yet to execute. SX:CZ is 2.14:1, so there is room for beans to run on the spread.

Wheat---SRW and HRW harvest moves fast as the crop is now 75+% in the bin. Spring wheat is coming on fast as warm and dry weather brings it early and harvest will be sooner than we think. Still has great potential but could use a few cooler temps and a shot of rain. MT has a few issues. MGEx is flat, KC and CME are carries…World still experiences a few production issues but Canada looks mostly OK and the US skated by without any major, major issues. Black Sea region has a weather issue as their production is still in question, which in turn brings into question their ability to export. USDA report tomorrow may not really mean much

***new crop train values are slashed as all the grain seems to be in the WCB and the RRs want this new grain to move to the PNW and the export market. Farmer selling is quiet and they are now bullish again…World has experienced drought in Russia, Ukraine, Argentina, S Brazil and other areas the past 12 months!!! Will the highs be seen in July????? Call if you need anything

Christopher Steinhoff
Market Analyst
800-328-6530
651-355-6558
651-355-3723 fax

www.countryhedging.com

Country Hedging Mid Day in the Markets 7-12-2012

Midday In The Markets

GRAINS

Grains and oilseeds are climbing higher as we wonder just how small the corn and bean crop are going to be. We’re seeing plenty of buying today; it appears no one wants to be short. Export sales were good for beans. Wheat continues to follow row crops also finding extra support from production problems in the Black Sea and Japanese buying. Soybean spreads are still weaker. Soybean fundamentals are still bullish, but the elephant in the room is how much will China pay for beans if their economy is slowing down? China sold 390,090 mt of beans from reserves today.

Export Sales: In thousand tons

                Old         New

Corn:     172.7     492.1

Wheat:                 311.8

Beans:  332.1     427.1

Meal:    95.7        74

Oil:         34.4        -0.5

LIVESTOCK

Once again higher corn prices and slow demand for beef continue to put pressure on cattle. Weekly export data showed a net sales of 17,300 tons, down 2,600 tons from last week. With a stronger dollar and a majority of “grilling” holidays behind us, exports will continue to hold sway over the market. Also, an abundance of supply as more cattle come off drought-ravaged pastures into the market will be detrimental to prices as well. Lean hogs are trading higher today on firmer cash prices and as packers buy hogs to fill out the week’s slaughter quota. Yesterday’s average cash hog price form Iowa/ Southern MN was $97.30, up $2.26.

ENERGY & FINANCIALS

Stocks continue to fall as investors lose hope of QE3. Not even the good economic data was able to revive their spirits. US jobless claims were down 26,000 to 350,000. Global economic growth is still weighing on the markets as investors wait for Friday’s reveal of more Chinese numbers and any further developments in the euro zone crisis. Gold is down $8.90 at $1,566.80. Crude is down $0.67 at $85.14. The Dollar is up $0.12 at $83.85. It looks like the dollar may be shaping into a “head and shoulders” pattern, so that should give us something to watch as well.

Jenna Roe

800 328-6530

Follow Us On:  

Country Hedging, Inc.
The Right Decisions for the Right Reasons

Overnight Highlights from Country Hedging's Tregg Cronin 7-12-2012

Outside Markets: Dollar Index up 0.181 at 83.749; NYMEX-WTI down $1.00 at $84.81; Brent Crude down $1.18 at $99.05; Heating Oil down $0.0416 at $2.7202; Cattle are lower, hogs are firmer; Gold down $11.40 at $1564.10; Copper is down $0.0510 at $3.3965; The Yen is firmer, but all other major currencies are weaker; Softs are mostly weaker; S&P’s are down 10.25 at 1326.00, Dow futures are down 87.00 at 12,449.00 and Treasuries are a bit better.

Grabbing headlines this morning is the weakness in the EURUSD cross which has pushed the euro down to the lowest level since June of 2010 at 1.2189, while the US Dollar makes 2-year highs.  Nice if you’re going to Europe in the next year.  The other striking thing is how investors are still searching for short term safe havens.  German, Dutch and Swiss 2-year treasury yields are now negative, meaning you’re going to pay those governments interest to hold on to your money just so you know you’ll get it back in two-years.  After early gains, Spanish 10-year yields are back to 6.69% and Italy at 5.87%.  The data out of Europe this morning was factory orders which showed a 0.6% rise in May from April, but France and the Netherlands were weaker than expected.

Rains have fallen across the Dakotas in the last 12 hours, and continue to work East across both states this morning.  Totals so far look like a trace to possibly 0.25” with heavier amounts in the NE portion of both states.  Otherwise, additional rain fell across the Delta, putting the 4-day total at 0.75-3.0” in most areas.  5-day forecasted precip is showing continued rainsa cross the Delta with the northern tip of this system reaching up to S-IL/S-IN/OH and bringing anywhere from 0.50-1.50” in the heaviest areas.  ND and N-MN could also see more rain by the end of the weekend.  The 6-10 day models remain highly divergent with the American showing widespread rain across the Midwest, but the Euro limiting rains to the Delta/TN/KY with some chances in the far NW-Corn belt, but nothing organized.  Continue to stick with the euro until proven otherwise.  The 11-15 shows rains in the central Midwest, bringing rains to most corn belt areas.  Temps should remain above normal throughout the period with warmer temperatures in the upper-Midwest.

After the incredibly volatile session yesterday which saw prices hit lows and then rally slightly into the close, that momentum is carrying into the overnight and early morning session with corn up double digits, wheat up around 7-9c and soybeans posting very slight losses.  It looks clear the selloff was overdone yesterday, especially as the rumors Sec Vilsack was going to address the RFS mandate proved to be false, but the technical damage had already been done.  Fortunately, markets are focusing on the bullish fundamentals this morning.  A further correction shouldn’t be ruled out as these markets can easily set back further while keeping the uptrend in place, but these markets should remain supported by fund interest and eager end users to extend coverage on any big break.

Overnight headlines included Pakistan resuming wheat exports after almost a year as its grain becomes internationally competitive.  Small volume were sold for spot shipments to Malaysia and Indonesia.  13.0% milling wheat is being sold around $295-298/MT C&F.  Pressuring a bit to soybeans was China selling 390,090MT of soybeans from government reserves in an auction Thursday to sharply better demand according to CNGOIC.  The government sold 379,488MT at CNY 4,005 ($17.11/bu) in provinces with a heavy crush presence.  This is the function of the market: get China to sell its reserves down and stop buying US beans.  We’re not at that price yet.  Strategie Grains downwardly revised its EU 12/13 grain harvest by 2.4MMT to 278.8MMT.  Corn and wheat were both cut.

From Morocco we learn their wheat crop has dropped 40% y/y to 5.1MMT due to drought.  Imports are expected to pick up.  In tender results, Japan bought 131,379MT of US milling wheat from the US for Aug 21-Sept 20 shipment.  Our favorite investment bank ($GS) raised their price forecasts on corn to $6.90/bu, their wheat forecast to $7.70/bu and soybeans to $16.25 due to drought concerns.  Their corn yield estimate is now 143.5bpa.  There were 25 Chicago wheat re-deliveries overnight as well as 462 soybean oil.  Open interest changes during yesterday’s session included an increase of 17,070 corn, 16,440 beans, 2,120 meal and 2,370 oil.  Wheat was up 6,810.  Chinese beans were down 41c, meal down $13.10, oil off 122c, corn down 1.50c and wheat down 8.50c.  Paris Milling wheat is up 1.42%, Rapeseed down 0.88%, Canola down 0.83% and UK feed wheat is up 0.60%.

Call things better to begin with today as cooler heads prevail and the bullish fundamentals matter.  Rains this weekend will be falling in areas which could help the soybeans still, but questions have to be raised about the corn, and the WCB crops don’t look on tap for a soaking rain just as temperatures build back above 90 degrees.  Yesterday’s price action caught a lot of people off guard, so make sure you level marketed is where you want it based on your production prospects.

Trade as of 7:05

Corn up 11-14

Soy up 2-5

Wheat up 7-9

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

afternoon grain market comments from Country Hedging's Tregg Cronin 7-12-2012

Below is from Country Hedging's Tregg Cronin

No full write up today, but some comments worth sharing:

First up, both weather services we use were less aggressive with rains in the central belt this weekend.  One is looking for spotty rains across E-IA/IL/WI/MI/N-IN now thought to be less than 0.20”.  The Northern Plains should be quiet the next 5-days.  The other said they reduced their 1-5 day coverage 5% to 40% through Monday.  Then the heat gets turned back on beginning early next week with Chicago forecast to hit 100* on Tuesday.  10-day highs for select cities below:

Sioux Falls: 87, 92, 91, 92, 92, 93, 89, 92, 94, 92

Omaha: 91, 95, 97, 95, 95, 95, 94, 95, 98, 96

Des Moines: 90, 93, 94, 96, 96, 95, 93, 98, 95

Decatur: 92, 90, 89, 93, 93, 93, 93, 92, 96, 95

Marshall, MN: 88, 89, 91, 90, 91, 88, 89, 93, 88

Indianapolis: 91, 85, 86, 90, 91, 91, 90, 89, 91, 94

Madison, WI: 91, 94, 92, 90, 94, 94, 91, 89, 93, 95

Very few overnight lows below 70* it should be pointed out, and even during the chances of rain for the ECB, most fail to move below 90* for a daily high.  Worth pointing out the sharp rebound in Nat Gas prices around midsession when the maps came out.  Hotter next week? 

More and more anecdotal reports from the WCB about how dry things are getting with S-SD talking of chopping silage already before nitrates move into the plant and render it useless.  SW-MN is also hurting bad for a rain, and according to boots on the ground need one in the next 10-days or else….  Scattered headlines had the wheat market moving higher today including the Russian Grain Union stating the entire Russian grain harvest would be below 80MMT.  This likely implies a wheat crop around 46MMT vs. the USDA’s latest guess at 49MMT.  Paris Milling Wheat finished up 3.0% today, and one trader said there was talk of Black Sea export controls, but those seem unlikely at the moment.  Keep in mind, however, it was late July/early August when Russia banned exports in 2010.  We made our blow off top the first week of August, sold off until November before rallying into the 2011 highs near $9.00 basis Chicago Wheat.   There were also rumors running around Indian wasn’t going to allow wheat exports, presumably because of high food inflation.  Lastly, contacts suggested China was sniffing around for cash wheat for feed stock, but basis moves didn’t imply same.

Corn yield ideas continued to move lower today with Rosenthal Collins dropping their estimate to 135bpa while NewEdge cut theirs to 139.9bpa.  As noted in yesterday’s commentary, RJ ‘O Brien’s two analysts are using 140-141, but both said when taking a look at state yield data, it doesn’t take much imagination to move it below 140bpa.  Another interesting tidbit from today’s session was DTN took a look at comparable drought year’s and the differential between planted and harvested acres.  In 1988, 2002 and 2005, harvested acres were typically 10% less than planted vs. the current year’s 9.2%.  If the 10% is used, another 312mbu can be shaved off our production.  For every half a million acres which come out of the harvested column, subtract 73mbu if we take the 146bpa as fact.

As noted in this morning’s comments, China did hold a successful state reserve auction on soybeans overnight where 99% of the 394,000MT offered were purchased at a price between $16.87-17.11/bu.  Their markets were down 41c.  This is the function of the market: go to a price which discourages the buying of US soybeans.  As evidenced by Brazilian basis levels today, up 20c to +200Q, it will be US beans they have to stop buying as South America doesn’t have any.  Speaking of exports, soy complex exports continue to be incredibly strong.  In the last week, exporters sold 12.2mbu, way above the 2.5mbu needed per week.  The USDA will have a difficult time justifying further demand cuts if this keeps up.  Bean Oil and Meal were also very strong, wheat was mediocre and corn was weak.

Traders were making note of RIN prices today, which have rallied to $0.0345/gln from around $0.01/gln at the June lows.  When these start approaching $0.10/gln it will be significant and worth noting as the rationing process of corn rolls on.  Barge freight continues to push higher as low water inhibits grain movement.  CIF corn bids were slightly weaker on the front end, but 1c firmer for new crop.  More chatter about Brazilian maize trading into South Carolina with the first vessel said to be on the move.  Again, more instances of rationing.  The spread between live cattle and feeder cattle continues to blow wider thanks to rallying corn, improving cattle crush calculations.  Still not a business a guy wants to leap in to with both feed, but better than something that isn’t so great.

If you noticed yesterday in the comments, any and all protein premiums have been wiped out of spring wheat.  Right now, wheat is wheat.  ND weather has been a bit cooler/wetter than SD weather, so possible high protein isn’t uniform, and Canadian weather likely less threatening than ND for same reasons.  Scales in the country are around -2/+2c a 1/5.  It would seem the elevators in the northern plains are content to let the farmer store grain when there are no carries on the board, and the farmer wants to utilize his new storage.  With that in mind, expect limited carries and small inversions to persist in Minneapolis wheat as has been the case the last several months.  As the market wants the wheat it’s going to have to bid for it and keep spreads firm, but farmers aren’t being paid to store spring wheat, and that is something they should realize.

Grains are up nicely on the week, and should try to carry gains into the weekend tomorrow.  I don’t know too many who want to be short going into a weekend in which rain chances are iffy at best.  Our markets don’t feel like they’re done going up just yet, but the demand destruction taking place is clear and present.  When it matters, it’s really going to matter.  Keep making sales, especially on wheat as historically these prices are near the upper 10-15% of historic ranges and at harvest no less.  A couple pictures to follow:

   

North East, IA near Decorah.

Sláinte.

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Morning Note - From Country Hedging's Joel Fitch 7-12-2012

Good morning,

Markets are rebounding after yesterday’s report.  Again for the corn it felt like the USDA was being pretty realistic for what we know.  On the beans I think that they are underestimating old crop exports and could be underplaying new crop demand.  Little more bullish wheat news out of Russia as the Stavropol region is worse than previously estimated. 

Weather today is dropping some moisture in the Delta and up into Tennessee.  There could be light chances in IL, IN, and Kentucky, but Friday is the more likely chance to get anything.  It feels like it only really matters for the beans in a lot of locations.  The 1-5 and the 6-10 are still for above average temperatures and for limited chances of rain in the ECB.  The delta should be improving with the weather pattern. 

Estimates for the corn crop are now ranging between the high 130s and the low 140s.  As we continue to tighten the corn market I think that there is more potential demand to ration.  We traded a good portion of last year with a carryout of near 800 mb and traded below the current corn price. 

Corn spreads have become quite minimal with the tightening of the supply.  This market should invert shouldn’t it.  Especially for the western corn belt, you are going to have to manage with inverses or at least very limited carries.  Depending upon profitability of the ethanol industry corn should want to move East more than usual with Chicago Beyond and the river being a good market.

Export sales were good for old crop soybeans again, we just haven’t stopped demand at these prices and that suggests that new crop demand could be stay robust at these prices as well.  Corn sales were okay 173 tmt old/ 492 tmt new.  Wheat was 312, kinda poor. 

Joel Fitch
Market Analyst
800-328-6530
651-355-3792
www.countryhedging.com

Morning Note from Country Hedging's Joel Fitch - USDA Report Recap

Below is from Country Hedging's Joel Fitch

It has a recap on the USDA report that was out this a.m.

Good morning,

Here is the quick and dirty from the report.  The expectations are located below.

Corn ending stocks were raised for old crop to 903 from 851 on a cut to exports of 50 mb.  That is the only change for old crop.  It increases carrying by 50 mb.  For new crop the USDA cut yield down to 146.0 and harvested acres to the expected 88.9 million acres.  Feed and residual was cut by 650 mb down to 4.8 bb still bigger than last year.  Ethanol was cut 100 mb to 4.900 bb and exports were cut down to 1.6 bb.  So they cut demand by 1,055 mb and ending stocks are 1,183 mb.  These demand numbers seem more realistic to me given the likely pricing of this crop. 

World ending stocks were dropped 21.7 mmt.  US is the only major change to production.  Domestic feed, domestic use, and exports fall. 

Bean ending stocks were lowered by 5 mb because exports were raised 5 mb.  This is quite surprising and seems far too small a gain in exports.  Ending stocks for new crop fell 10 mb to 130 mb.  Yield was lowered to 40.5, but the acres jumped as the June 30^th report indicated – even though this number is too big due to the drought.  Demand was reduced.  Crush was cut by 35 mb and exports were lowered by 115 mb.  This is probably possible because of the high prices we are achieving in beans.

World ending stocks fall 3 mmt to 55.66 mmt.  12/13 World production is down 4 mmt from last month with the US being the only major change.  Demand categories fall here as well.

Wheat ending stocks were raised for 11/12 by 15 mb.  Minor changes.  12/13 ending stocks were cut to 664 down 30 mb from last month.  Supply change is negligible, but demand is altered feed is cut 20 mb and exports are raised 50 mb to 1.200 bb.

World wheat ending stocks are projected down 3 mmt to 182.44 as production falls 4 mmt in Russia, 2 mmt in Kazhakstan.  Demand projections fall slightly with feed, domestic use, and exports being cut.

By class wheat shows ending stocks tighter in 12/13 for HRW at 266 mb, SRW at 143 mb, and white wheat at 60 mb.  Ending stocks are projected to loosen for 12/13 in HRS at 155 mb, and Durum at 40 mb.  HRW 20% stocks/use, HRS 33% stocks/use, SRW 28.5% stocks/use, White 21% stocks/use, Durum 37% stocks to use.

Overall, while these cuts seem realistic to the production for corn as well as the demand side I think that the USDA is saying that these prices are doing enough to ration demand at the current levels of estimated production.  Soybeans production is too high by 40 mb to 80 mb because of the drought and double crop acreage.  Demand is hard to know on beans.  Price typically rations demand, but with China being the only major demand and the US being the only major supplier it is hard to guess what happens.  We should be back to looking at weather. 

Joel Fitch
Market Analyst
800-328-6530
651-355-3792
www.countryhedging.com